Arizona’s largest power utility says the rooftop solar industry is cashing in big and should make some concessions. That comes ahead of the first in a series of court cases on rates for power companies this year.

With fewer than 100,000 customers, the Tucson-based utility UNS Electric doesn’t nearly compare to the 1.2 million served by Arizona Public Service, or APS. But when it comes to residential solar, their futures may be linked. How the Arizona Corporation Commission rules on the UNS case could set a precedent for APS, which will have its own day in court later this year.

That’s why APS has filed testimony showing the solar industry is reaping major returns at the expense of ratepayers. Anna Haberlin with APS says this refutes the assertions made by major solar leasing companies.

“These firms earn a 40 percent return on rooftop solar leases in Arizona and in some cases much higher. So this obviously, we believe, stands in contrast to the claims that rate reform will cripple the industry and kill jobs,” she says.

That number is based on a study conducted by a firm called Navigant. Haberlin says the findings illustrate that the "net-metering subsidy" can be phased out. Under that rate scheme, solar customers who are hooked up to the grid receive credit at retail prices, instead of wholesale, for power produced during daylight hours. While this allows customers to save money on their monthly bills, utilities argue that does not take into account the burden placed on the grid by solar customers who still need power when their systems are not producing. 

Instead, APS is advocating for what’s known as a "demand charge," which is based on the maximum amount of electricity a customer uses during peak hours. But the solar industry contends that would not be good for customers and net-metering is still critical for the underlying economics of rooftop solar.